Volvo in talks for stake in Ashok Leyland

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Today's market is full of competition, with one firm trying to
usurp another.Competition brings out the best in anybody and it has
direct implications in all kind of markets. The partnership talks
between two automobile majors, Volvo and Ashok Leyland is only a
testimony for the aforesaid.

Volvo has been India for the past eight years, doing decent
business by selling buses and trucks to both government and private
parties. In Volvo's perspective, entering into the medium commercial
vehicle market is very crucial for its expansion. The medium
commercial vehicle business has not been in its ambit as far as the
Indian market is concerned and this partnership would suffice its
needs to gain a stronghold. Volvo was forced to payback a sum of
$2.2 bn due to recent pressure from its shareholders and this has
made it inquisitive in making acquisitions and adding to its
repertoire. So this alliance would and could prove to be beneficial
to the Swedish giant.


On the other hand, Ashok Leyland would consider this partnership
as a filling of gap caused due to the quitting of IVECO Fiat, the
Italian player. With IVECO Fiat- the heavy truck arm of Italian
automobile giant, having joined hands with rivals, Tata Motors after
selling its 15% stake in LRLH, the Hindujas are all set to enter
into a partnership with Volvo. LRLH, the holdings firm of the
Hindujas family who now hold 51% of Ashok Leyland, requires
technology for its own betterment and it would expect the much
needed technology exchange would happen in this partnership. With
global conglomerates like Daimler Chrysler, International Truck &
Engine Corporation and MAN Nutzfarhzeuge vying the Indian Market and
Tata Motors planning to introduce world truck range in 2008 Ashok
Leyland has to try every trick to be competitive enough in the
market.

Though the fiscal dealings haven't been disclosed yet, this
partnership would certainly be fruitful to both the parties. The
salubrious competition would also bring the best out of the people,
as said before and when two firms, best in their business, tie up,
it is needless to say it would benefit the people and the nation at
large.

KRISHNAN